Where legal aid firms have over-claimed on one part of their audit sample but under-claimed on another part, the Legal Services Commission (LSC) should offset the two against each other, the costs appeal committee has ruled.

The recent ruling, made in relation to files submitted by Scunthorpe firm Martin & Haigh, said that when taking an audit sample, the LSC must assess the correct value of each file.

'Where the solicitor has claimed less than the value of an individual item, the full value should be allowed,' it said.

'If the total amount due on a file has been under-claimed by the solicitors, the undervalue must be set against any over-claims elsewhere in the sample.'

An LSC spokesman stressed that the ruling settled a point of principle and did not apply to audits conducted before the decision, so previous audits would not be invalidated.

'New guidance has now been issued to implement the decision,' he added.

Martin & Haigh partner Penny Owston - who represents Lincolnshire on the Law Society Council - urged firms to look closely at all their files to see whether they could use the ruling to their advantage.

'We hope this will level the playing field a bit because people are totally fed up with all the bureaucracy,' she added.

Legal Aid Practitioners Group director Richard Miller said the decision was a clear indication of how the LSC should have been applying the rules from the beginning.

'If on previous audits the LSC has not offset under-claims against alleged over-claims, those previous audits are flawed,' he argued.

Paula Rohan